Thyroid-specific enhancer-binding protein (T/EBP) is a key DNA-binding protein which controls thyroid-specific expression of genes encoding thyroid peroxidase, thyroglobulin, and thyroid stimulating harmone (TSH) receptor. T/EBP also regulates expression of lung-specific genes such as surfactant proteins A and B. Developmental analysis of T/EBP expression during rat embryogenesis demonstrated that the expression of T/EBP is found at 10.5 days post-coitum (E10.5) in thyroid rudiment, embryonic lung epithelium, and the floor of diencephalon, suggesting that T/EBP may be involved in development and/or differentiation of these organs. In order to address this question, we produced a mouse lacking T/EBP expression using homologous recombination in embryonic stem cells. To this end, we first isolated and characterized a gene encoding T/EBP from a 129/Sv mouse genomic library. The T/EBP-deficient mouse thus obtained was characterized histopathologically and by in situ hybridization. The homozygous mouse was lacking lung and instead had a sac-like structure in its pleural cavity. It was also missing thyroid although the parathyroid was normal. Further, extensive abnormalities were found in its brain, especially in the hypothalamic area. The pituitary was also absent. These results clearly demonstrated that T/EBP is essential for the formation of lung, thyroid, hypothalamic area of the brain, and pituitary during early embryogenesis.